Canada’s annual inflation picked up pace in January rising to 1.0 per cent compared with a year ago, the country national statistics agency reported Wednesday.
Statistics Canada attributed much of the increase to rising gasoline prices that increased 6.1 per cent compared with December. A 1.7-per-cent increase in prices for durable goods also pushed the January inflation up.
Still, gasoline prices were 3.3 per cent below where they were in January 2020 when the first hints of demand uncertainty hit global markets as COVID-19 began to spread.
Statistics Canada said that excluding gasoline prices, the consumer price index in January was up 1.3 per cent compared with a year ago.
Canadians also paid more for automobiles as car prices jumped 2.9 per cent compared with a year ago. However, shelter costs actually eased a bit in January, as soaring home prices were offset by mild rent increases, low interest rates and a sharp fall in Ontario electricity rates.
Food prices also remained notably calm, rising just 1.0 per cent year over year, the slowest increase in almost three years.
BMO chief economist Douglas Porter said the solid rise in January prices sets the stage for what promises to be a significant run-up in headline inflation over the next three months.
“Depending on what unfolds in the next few weeks for energy costs, overall inflation could easily test the 3 per cent threshold by April, before easing,” Porter wrote in an analytical note to clients.
“However, we believe that the still-steady pace of core [inflation] is a better guide to where inflation will ultimately settle (i.e., closer to 2 per cent) after the noise works its way out of the data. Having said that, note that even core prices are slowly grinding higher from last year’s lows.”
With files from The Canadian Press
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